Is there any chance of recovery if a produce buyer goes out of business or becomes insolvent?
In 1984, the PACA statute was amended to include a statutory trust (“PACA trust”) to assist produce sellers to obtain recovery from insolvent buyers. The PACA statutory trust imposes a duty on the produce buyer to hold its produce-related assets in trust and gives the suppliers who sold those goods priority to those assets over all other creditors. In other words, the produce buyer is legally obligated to keep its produce inventory and receivables from the sale of produce available for the sole purpose of paying the produce supplier.
